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Radical Uncertainty

Just noticed this Harvard Business Review piece, that suggests we should use probabilities to process uncertainty.

It depends. What probability should you use? Is the author suggesting that we should just make them up, as a "subjective probability"? While there are some interesting points made about looking at data to provide clues on what's more or less likely, the real danger with this approach is that it completely neglects to consider what happens when the wider environment changes, which it always does.

Here's another great book on this subject: "Radical Uncertainty" by Mervyn King and John Kay, that argues that, while Bayesian thinking has its place in certain circumstances, it is more often than not misleading when processing profound uncertainties or longer term outcomes. Instead they suggest that you ask the question "what's going on here?" which seems a much more useful way of looking at it.

My training tackles exactly this question, and deals with how any investment decision (time, money or other resource) is made in a situation dominated by radical uncertainty.

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